How often can you file for bankruptcy?

January 17, 2017

When considering bankruptcy, it is important to consider the timing of any prior bankruptcy that you may have filed.  The timing of any previous bankruptcy can affect whether you are currently eligible to file another case, or potentially even whether the protection of the bankruptcy stay would apply to your new case filing. 

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Defaulting on your SBA loan

January 11, 2016

SBA Loan
According to, Small Business Administrative loans may be an option for individuals wishing to start or expand a business who are in need of financing help.  While the loan itself is financed through your local participating bank or lending institution, the SBA guarantees the loan.  In the event you should default on your SBA loan, the risk to the lender is minimized but you, the borrower, remain obligated on the debt.

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Non-Filing Spouses in Bankruptcy

January 9, 2017

A common question when considering bankruptcy is, “How will filing a bankruptcy affect my spouse?”  In many cases it might be in your best interest that only one spouse file a bankruptcy.  In other cases, it may benefit both spouses to file.  It often depends on the nature of your debt and property ownership. 

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Chapter 7 Bankruptcy and Protecting Your Tax Refund

December 29, 2016

When you file a chapter 7 bankruptcy, you are required to disclose your ownership or interest of any kind in property.  These interests are then listed on your bankruptcy papers that are filed with the Court.  When a chapter 7 is filed, a Trustee is appointed to review and administer your case.  One of the Trustee’s responsibilities is to review the property listed on your bankruptcy papers to determine whether any funds might be available for creditors.

taxes 806396 1280

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Is the Prepetition Assignment of Rent Property of the Debtor’s Bankruptcy Estate?

December 22, 2016

When a bankruptcy case that involves commercial property, a question that often becomes a key issue is whether an assignment of rent is property of the bankruptcy estate. Most of the bankruptcy rulings in Michigan have held that prepetition assignment of rent remains property of the Debtor’s bankruptcy estate. See In re Newberry Square, 175 BR 910 (Bankr ED Mich, 1994). This issue can turn on whether the controlling state law follows a lien theory or title theory for mortgages. See In re Builders Group & Dev. Corp., 502 BR 95, 109 (Bankr. DPR, 2013). Michigan, like a majority of states, follows the lien theory and as a result case law in Michigan bankruptcy matters have found that prepetition assignment of rent remains property of the estate.

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Can I Keep My Tax Refund If I File a Bankruptcy?

December 15, 2016

Tax season is often a good time to consider and review your bankruptcy options because many people use some of their tax refunds to pay for the bankruptcy, which can then allow you to discharge and eliminate most debts. 

The question that might arise during this time of the year is whether you can keep your tax refunds if you do file a bankruptcy.  Determining if you can keep your tax refunds is an important part of deciding if bankruptcy is an option for you.  The answer in most chapter 7 bankruptcy cases is yes.  However, this does depend on the total amount of the refund, the timing of the filing, and when it is received.  The timing of a bankruptcy becomes a very important issue if you typically receive a larger refund.   Another issue that can arise is if you get a refund and use it to pay back certain debts, or friends or family, and then want to file a bankruptcy.  This can potentially create issues.  For all of these reasons, it is advisable that you meet with an attorney prior to receiving your refund to determine what is allowable and what can create problems.

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The Bankruptcy Estate – When is a Claim Property of the Estate? (Part 3 of 3)

December 6, 2016

Chapter 13 and Post Discharge

In our previous two entries, we examined the interaction between the bankruptcy estate and a cause of action, and the timing of claims and whether they are sufficiently rooted in the pre bankruptcy past of the Debtor.  With this final entry, we look a bit more closely at claims of the Debtor and chapter 13 bankruptcy cases and claims arising post discharge.

The Chapter 13 - An Expansive Definition

In chapter 13 bankruptcy, the concept of “property of the estate” is broadened and is not so rigidly defined as simply pre-petition and post-petition property. In chapter 13, “property of the estate” is “broadened to include not only the property brought into the estate via § 541, but also all legal or equitable interests of the debtor in property, including earnings from services performed by the debtor, that the debtor acquires after the commencement of the case but before the case is closed, dismissed or converted to a case under chapter 7, 11 or 12, whichever occurs first. 11 U.S.C. § 1306(a)(1) and (a)(2).” In other words, in a chapter 13, property of the estate may include causes of action that arise post-confirmation.

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The Bankruptcy Estate – When is a Claim Property of the Estate? (Part 2 of 3)

December 2, 2016

In our previous entry, we examined the interaction between the bankruptcy estate and a cause of action, or claim, of the Debtor.  The issue can be complex.  In this entry, we look more closely at the issue of timing.  When the cause of action arises, or when it accrues, can define whether the property belongs to the bankruptcy estate.


In Johnson, Blakely, Pope, Bokor, Ruppel & Burns, P.A. v. Alvarez (In re Alvarez) 224 F.3d 1273, 1276 (11th Cir. 2000), the court looked at a malpractice claim arising from the actual bankruptcy filing in order to determine whether it was property of the bankruptcy estate.  Debtor filed a complaint against his former attorney alleging legal malpractice. The crux of the debtor’s malpractice claim was his allegation that his lawyer negligently disregarded his instructions to file a Chapter 11 on his behalf, and instead filed a Chapter 7. Debtor’s complaint alleged that as a result of his negligent actions the debtor sustained damages, including but not limited to, loss of control and ownership of several assets, including ownership interests in stocks, loss of opportunity, loss of assets, and other damages recoverable at law.

Typically, a cause of action for legal malpractice has three elements:

1.            The attorney’s employment;

2.            The attorney’s neglect of a reasonable duty;

3.            The attorney’s negligence was the proximate cause of loss to the client. 

The third element of a legal malpractice claim, that the attorney’s negligence was the proximate cause of loss to the client, is also referred to as the concept of redressable harm.  A cause of action accrues when the last element constituting the cause of action occurs.

The court concluded that, looking to state law, this interest in property, which arose simultaneously with the filing of the debtor’s bankruptcy petition, was an interest of debtor and property “as of” the commencement of the case, and thus, property of the estate. 

Debtor attempted to argue that the third element of his malpractice cause of action, that of redressable harm, did not occur until after the filing of his bankruptcy petition.  The court disagreed. 

At the moment the debtor’s bankruptcy petition was filed, his chapter 7 bankruptcy estate was created, his interest in property vested in the estate, and all of the legal ramifications creating an estate came into existence. The transfer of debtor’s interest in property to a chapter 7 bankruptcy estate, rather than a chapter 11 bankruptcy estate as the debtor intended, is sufficient injury the court held to indicate the debtor had a cognasizable interest in his legal malpractice claim at the precise moment his chapter 7 petition was filed.  The court specifically found that the debtor’s loss of ownership and control of his assets upon the bankruptcy filing constitutes a significant and tangible change which obviously caused harm to him. 

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